Reading the US/France tax treaty, the protocols, and the explanations of the protocols, has left me without a clear understanding of whether a nonresident alien who is the beneficiary of a US IRA has to pay US income tax or not. Publication 901 indicates it is taxable at a flat
30% rate. An old KPMG article from 2002 says it isn't taxable. Anybody had any recent experience with this?
I failed to mention that the nonresident alien is a resident of France.
My interpretation of the 2004 Protocol makes IRA distributions taxable by the US. See Article III of that protocol. It completely replaced Article XVIII of the treaty. The 2009 protocol only made changes to social security.
Is the IRA distribution taxable at a flat 30% or at ordinary rates?
And you should get credit for US taxes paid on your French tax return.
30% and the treaty says only the US taxes it.
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